Financial management is an important function for every landlord. You're running a rental property business which has revenues and expenses. Without keeping a keen eye on your finances, your investment can fail.
However, like most small business owners, many landlords struggle with rental property accounting. Some don't have the necessary bookkeeping knowledge, others don't have the time to keep an eye on the money, and others simply don't care.
Don't be like any of these landlords. If you don't know where to start as far as property accounting is concerned, this guide is for you. Read on to find a few landlord bookkeeping essentials to live by.
Open a Separate Account for Your Rental
Mixing personal and business finances may seem convenient because it eliminates the need to track multiple accounts. In the long term, however, it's detrimental to your rental business.
For starters, it'll be difficult to have a clear picture of the property's cash flows. To know how much you're spending on the property, or how much is coming in, you'll have to filter out those transactions, which is easier said than done.
With a separate account for the property, you'll be able to easily track the property's cash flows.
Keep Financial Records
A bank account will keep a record of all the transactions, as long as they're done on the account. That's not enough, though. You still need to keep the necessary physical records.
For example, when you pay a repair professional from the property's account, the transaction will be recorded. But to back up the transaction, you need to keep the repairman's invoice.
Keeping these financial records is especially important for taxation reasons. When claiming a deduction, the IRS might require you to provide physical proof of the expense.
Leverage Accounting Software for Landlords
Admittedly, accounting isn't an exciting task. Even for professional accountants, there's no joy in breaking down numbers and whatnot. Thankfully, you don't have to endure a painful time keeping your books of accounts.
You just need to invest in the right landlord accounting software. The program will automate most of your bookkeeping tasks, all while bringing an unparalleled level of accuracy to the process.
Hire a Bookkeeper
Accounting software can make your life considerably easier, but like all technology, it's only as effective as the user. If you're still struggling to stay on top of things, hire a bookkeeper, even on a part-time basis.
This professional will take over all your accounting duties, helping you take a hands-off approach. What's more, they can recommend ways to cut costs and maximize rental income.
Rental Property Accounting for Palmetto Landlords
Rental property accounting is one of your most important functions as a landlord. Keep an eye on the books of accounts, and you'll know where the money is going.
If that still sounds like hard work, don't fret. At PMI Elite Properties, accounting and reporting is one of our core services. We use the best technology to monitor the financial performance of your property, and provide you with real-time information.
Get in touch with us and let's make property management a manageable task for you!
